Do colleges know if you qualify for the Pell Grant?

I'm trying to understand how colleges determine financial aid packages. Do they automatically know if I'm eligible for the Pell Grant, or is it something I need to proactively report to them?

Colleges typically receive information about your Pell Grant eligibility through the FAFSA (Free Application for Federal Student Aid). When you fill out the FAFSA, the Department of Education automatically calculates your eligibility for federal aid, including the Pell Grant. The resulting Student Aid Report (SAR), which includes this information, is also sent to the colleges you listed on the form.

Your SAR includes a number called the Student Aid Index (SAI), previously termed Expected Family Contribution (EFC), which helps colleges understand your level of need for financial assistance. Pell Grant eligibility is largely based on your SAI. The lower your SAI, the more financial aid you're likely to receive in the form of Pell Grants, as it is need-based.

Schools will only know of your Pell Grant eligibility if you complete the FAFSA. If you're eligible, the grant will usually be incorporated into your financial aid package without any extra steps needed from you. Each college's financial aid office then utilizes this information to create a financial aid package that typically includes a mix of grants, work-study, and loans.

So, while you do not need to proactively report your Pell Grant status to colleges, you do need to complete the FAFSA for colleges to understand your financial situation and federal aid eligibility. Remember, the FAFSA can be filled out as early as October 1 for the following school year, and it's generally beneficial to submit the form as soon as possible.